As recently picked up by American Banker and National Mortgage News, award-winning FormFree took a starring role in an article about how technology could create a perfect mortgage loan that satisfies GSE’s like Fannie and Freddie and also supports lenders.
Excerpts from the article:
The government-sponsored enterprises are increasingly pushing lenders to deliver loans without any defects—which can range from missing documents to misrepresented assets. Lenders complain that a zero-defect standard is unrealistic and are pushing back, asking Fannie and Freddie to lighten up on the requests to buy back problem loans.
The solution to this impasse may lie in the GSEs’ growing acceptance of alternative ways to verify data, such as electronic bank statements. Though still a ways off, some experts say, the digital verification of five bedrock elements of mortgage lending—credit, income, assets, employment and identify—could go a long way toward helping lenders more accurately determine a borrower’s ability to repay their mortgages.
In this scenario, a loan would be considered “perfect” if delivered to the GSEs with ironclad data, including borrowers’ income and assets that could be immediately verified and updated in real time by a financial institution. With more reliable data, the GSEs would have greater confidence that borrowers would not default. In return, lenders would receive a juicy carrot: fewer buyback requests.
When consumers apply for loans, they usually fax or scan and upload bank statements to a lender. Lenders then complete a 1006 form to verify the cash deposits a borrower lists on their loan application. But data from bank statements often have to be reverified several times before a loan closes, a costly and time-consuming process for lenders and borrowers alike.
Brent Chandler, the founder and CEO of FormFree Holdings, an Athens, Ga., company that provides mortgage lenders with real-time connections into borrowers’ bank accounts from 15,000 financial institutions, says that electronic verification would streamline mortgage lending and the collection of documents while weeding out borrowers who try to game the system.
“If the GSEs can go directly to the source and remove people from the process, they mitigate fraud and have 100% quality data,” says Chandler. “If a loan gets to the GSEs with 100% quality of data, they can remove the reps and warrants sooner.”
You can read the full story at National Mortgage News here.
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